Methods to keep away from paying £ 130,000 gross sales tax charges when exporting to the EU
Businesses selling goods to Europe are required to pay for VAT registration in all 26 EU countries, which costs up to £ 130,000.
The UK left the EU on January 1st and small businesses are now required to register for VAT in every country they sell direct to customers. Also, they must have a physical company representative in each country, not just a brass company.
Given that registering for VAT costs between £ 3,000 and £ 5,000 per EU country, small businesses could be left with a £ 130,000 bill just for the right to pay VAT in each territory.
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Sean Glancy, VAT and indirect tax partner at accountant UHY Hacker Young, said: “There is a risk here that a UK company that transports goods to consumers in Germany, Italy and Austria, for example, will register for VAT in all of these countries got to . If that multiplies across Europe, it will mean a lot of registrations, time, resources and costs. “
The good news is that this will only be the case until July 1st, when the EU launches a one-stop shop for VAT registration across Europe, which means UK businesses only need to register once. This one-stop-shop system was originally supposed to be introduced earlier, but the EU has pushed back its introduction due to Covid.
This has nothing to do with Brexit, but with the EU’s continuous striving for harmonization between the member states.
However, this still leaves a potentially disastrous six month hiatus for small UK B2C exporters.
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But Glancy believes he has found a workaround that could save UK firms tens of thousands of pounds.
According to Glancy, all you have to do is set up a European office in a business-friendly EU country like the Netherlands and then send your goods to the Netherlands through a warehouse for distribution across the EU. In this way you become an EU taxpayer. In the past, the Netherlands has long been a starting point for goods shipped to Europe.
Privately, DIT advisors have told small businesses the same thing, The Observer said – that the best way to get around border and VAT problems, which have been mounting since Jan. 1, is to register offshoots within the company the EU internal market, from where they can sell their goods far more freely.
The downside is that traders, aware of this golden opportunity, have raised the prices for transhipment of British goods into Europe.
Glancy said, “It’s an absolute nightmare. The UK authorities have provided no assistance in this regard. Ultimately, there will come a point where we all know what we are doing, but right now there is a lot of red tape and uncertainty. Moving goods to Europe has become very painful. “
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